I am writing this because it appears if you are a large mortgage corporation and you have difficulties financially, the government miraculously can come to your aid. Well, what about the little man. The basic consumers that are having problems coming up with the money to pay for a foreclosure on a home because the variable rate jumps so sky high everyday?
Where is their "loan" bailout? Where is their relief? I always wondered why there is never any money for social programs, money to fund National health care plans (instead of these pariah insurance companies), money to offset our ever growing oil situation, but there is MONEY to bail out companies like FANNIE MAE and FREDDIE MAC. We have a gazillion dollar National Debt, so where did this money come from?
I lost my home in 2006. I was temporally homeless (if not for the kindness of my friends and family). Their was no negotiation on my behalf by the government. There was no reprieve. I had a lender who said, "pay now or lose your home." I couldn't make the payments. I was layed off my job, three months prior.
What Fannie Mae and Freddie Mac are mandated to do, is to buy mortgages from private banks. The private banks, meanwhile, make mortgage loans with the comfort of knowing that they will be able turn around and sell those loans to Fannie Mae and Freddie Mac. Well, if Fannie Mae and Freddie Mac are no longer able to pay out money, where does it leave these banks.
I am small fry. Why can Fannie Mae and Freddie Mac not be allowed to fail? Simple, because the mortgage defaults and foreclosures in the US will hit the Asian central banks among others. The defaults on MBS ( Mortgage Backed Securities) backed by Fannie Mae and Freddie Mac will be looked upon the world as almost equivalent to a default by the US government on US treasury bonds. Even the thought of such a possibility is too scary. What hurt these companies, Subprime accounts. (the same accounts hurting the local banks).